What are the trends and issues facing Maryland CPAs? Tom Hood's legendary roadshows offering 4 hours of free CPE to Maryland CPAs every six months. Designed to keep MACPA member abreast of the rapidly changing CPA profession and let them know what they can do to shape their future and the future of their Profession. You will see updates on the latest accounting standards, federal and state legislative issues, and the macro trends facing businesses and CPAs.

1. MACPA
Professional
Issues
Update
–
Fall,
2011
Tom
Hood,
CPA.CITP
CEO
&
ExecuDve
Director
Maryland
AssociaDon
of
CPAs
Business
Learning
InsDtute

2. Our
Agenda
• Economy
• Future
Trends
• General
• Profession
• What
MACPA
is
doing
about
it
• Thriving
in
the
chaos

3. But
first
a
word
from
our
members

4. What
do
you
think?

5. CPA
Outlook

6. AICPA/UNC
Economic
Outlook
Top
Challenges

7. What
we
do
know…
1. We’re
geWng
older
-­‐
Age
will
be
biggest
age
cohort
by
2015.
2. Age
is
impacDng
economy
–
Healthcare
will
be
20%
of
GDP
by
2020.
3. We’re
creaDng
fewer
jobs
–
From
2000
to
2010
we’ve
created
709
jobs
for
every
100
people,
from
2008
to
2018
that
drops
to
49!
4. We’re
spending
less
and
saving
more
–
Median
wages
fell
in
2008
to
1983
levels
and
saving
rates
rose
from
.3%
to
6.4%
from
2008
to
2010.
Sales
of
cars
&
homes
have
fallen
off
significantly.
5. The
government
will
follow
suit.

8. The
economy
is
in
a
big
downshie

9. The
next
thing…
Thirty
(30)
years
of
Prosperity?
"Economic
historians
assure
us
that
new
technology
will
eventually
enable
millions
of
ordinary
employees
to
add
more
value
in
the
workplace,
increasing
general
prosperity,"
Snyder
says.
Historically,
he
says,
such
periods
of
economic
prosperity
have
lasted
as
long
as
30
years.
–
Interview
with
Bill
Sheridan
–
MACPA
Chief
Editor

10. What
has
gone
away
or
been
invented
since
you
have
been
born?

11. Why we are here?
The tornado of changes from CPA Vision Project circa 2000

13. What CPAs have said abut the future:
1. Aging population, loss of wisdom, knowledge transfer
2. Global rules & standards –IFRS – complexity
3. Information overload, complexity (Need for critical thinking & filter)
4. Information Security, Privacy & Data Protection
5. Global Competition, Rise of the Rest
6. Work-Life Balance
7. Diversity – Cultural Fusion – Beiging of America
8. Changing Communication (decline of face-to-face)
9. Increased Globalization
10. US Deficit
11. Education

14. The
6
C’s
1. Change
2. Complexity
3. Convergence
4. Compliance
5. CompeDDon
6. Competency

15. “# 1 reason organizations fail is
that they miss the weak signals
of disruptive change.”
– Andrew Zolli

16. 4x=1890
7x=1670

17. Welcome to the Extreme Future!
1.
Increased
speed
2.
Increased
complexity
3.
Increased
risk
4.
Faster
pace
of
change
5.
Surprises
everywhere
and
everyday
Dr. James Canton – author of The Extreme Future

18. The single most important trend in the world today
"It starts with the fact that globalization and the information
technology revolution have gone to a whole new level.
Thanks to cloud computing, robotics, 3G wireless
connectivity, Skype, Facebook, Google, LinkedIn, Twitter,
the iPad, and cheap Internet-enabled smartphones, the
world has gone from connected to hyper-connected.”
- Thomas Friedman NY Times author
The World is Flat

19. IBM’s recent Global study of CEOs found
thateight out of ten CEOs see
significant change ahead, and yet the gap
between expected change and the ability
to manage it has almost tripled since our
last Global CEO Study in 2006.

20. How
is
your
Complexipacity?
All
complex
phenomena
are
systems
of
systems
that
cannot
be
predicted
with
confidence
because
they
involve:
• EssenDally
infinite
numbers
of
variables
and
linkages
about
which
we
can
never
have
complete
data
• Incalculable
risk
• Uncertainty
(the
human
factor)
• Surprises
–
random
“emergence”
&
Black
Swans
• Ambiguity
–
Rumsfeld’s
“Things
we
don’t
know
we
don’t
know”

21. As knowledge moves from stocks
to flows, how do we stop our inventory
from becoming obsolete?

22. We
can
choose
to
harness
the
winds
of
change
The tornado of changes from CPA Vision Project circa 2000

23. From
feeling
“lonely
at
the
top”

24. To
the
wisdom
of
the
crowd

25. Technology
as
Accelerator
of
Change

26. Speaking
of
Technology
How
the
Tech
guys
are
structured
From
designer
Manu
Cornet
via
Foursquare
product
chief
Alex
Rainert

27. AICPA
Top
10
Technology
Issues
1.
Control
and
Use
of
Mobile
Devices
2.
InformaDon
Security
3.
Data
RetenDon
Policies
and
Structure
4.
Remote
Access
5.
Staff
and
Management
Training
6.
Process
DocumentaDon
and
improvements
7.
Saving
and
Making
Money
w/Technology
8.
Technology
Cost
Controls
9.
Budget
Processes
10.
Project
Management
&
deployment
of
new
apps

28. SOC
it
to
me!

29. The
Cloud
is
geWng
bigger
• Security
• MulD-­‐Tenancy
• Reliability

30. Social
Media
RevoluDon

31. The generation gap is widening

32. Eight
ways
you
can
work
Smarter
1. Recognizes
that
s/he
learns
conDnuously
as
s/he
does
his/her
job.
2. Wants
immediate
access
to
soluDons
to
his/her
performance.
3. Is
happy
to
share
what
he/she
knows.
4. Relies
on
a
trusted
network
of
friends
and
colleagues.
5. Learns
best
with
and
from
others.
6. Keeps
up-­‐to-­‐date
with
what
is
happening
in
his/her
industry
or
profession.
7. Constantly
strives
to
improve
his/her
producDvity.
8. Thrives
on
autonomy.
from
Jane
Hart
author
of
the
Social
Learning
Handbook

33. Old
dogs
need
to
learn
some
new
tricks

34. 5
Forces
of
GlobalizaDon
1. Growth
of
consumers
in
emerging
economies
2. Technologies
that
empower
consumers
&
communiDes
3. Increase
in
labor
producDvity
in
developed
markets
4. Shie
of
economic
acDvity
between
and
within
regions
5. Increasingly
global
markets
for
labor
&
talent
The
counter
trend
is
LocalizaDon
or
think
globally,
act
locally

35. GlobalizaDon
–
Chinese
auditors
visit
MACPA
Towson
CPA
Center

36. Global
CPA
PosiDoning
CGMA

38. Compliance

40. The Year of Changes in Standards
SOC Reports FASB/IASB COSO Integated
• SSAE 16 (SOC convergence Framework
1) • Major changes • Comprehensive
• SOC 2, 3 to GAAP Update
• Cloud • June 30 target • Exposure Draft
computing for priorities Q4 2011
(C2B) • Final 2012
• 2 guides in July
American Institute of CPAs

41. The Year of Changes in Standards
Clarity Project Ethics
• Finishes late Codification
2011 • Exposure draft
• Standards by late 2011
effective for • Complete by
2012 year-end late 2012
audits
American Institute of CPAs

42. Convergence
-­‐
IFRS
&
US
GAAP?
• AdopDon
/
Conversion
-­‐
a
switch
from
local
standards
to
IFRS,
without
converging
them
first.
• Convergence
-­‐
migraDon
of
local
standards
to
being
closely
aligned
with
IFRS.
• Endorsement
-­‐
formal
endorsement
of
new
or
amended
IFRS
before
they
become
legally
binding.
• Condorsement
–
A
liqle
bit
of
2
&
3
above.
Term
Coined
by
SEC
Deputy
Chief
Accountant
Paul
Beswick
in
December,
2010

43. Small
Business
is
the
liqle
engine
that
could

44. SMBs
fighDng
against
the
odds
• Annual
cost
of
Federal
Compliance
$1.75
trillion
• Federal
burden
exceed
costs
of
health
care
per
person
by
50%
• Cost
per
employee
=
$8,086
• For
SMB
<
20
=
$10,500
per
employee

45. Another way to look at standards & oversight
Public Company Private Company Int’l Company
Financial SEC FASB IASB
Reporting
FASB PCFRC IFRS & SME
Audit /Attest AICPA
Performance
Standards
PCAOB ASB, ARSC, IAASB
PRB
Code of AICPA AICPA
Conduct
PEEC PEEC
IFAC
CPA
State Oversight & Enforcement of CPA License
Licensure

46. The Players
SEC
FAF
BRP FASB GASB
PCFRC
& State Boards & State CPA
Societies

47. Additional Background Info
15,000 issuers and 28.5 million private companies
but GAAP driven by public company issues
Small businesses employ more than half of all
private sector workers
Private companies and their financial statement
users have information needs that are different
than public companies

48. Concerns About Private Company
Financial Reporting Include:
± Too many GAAP-specific requirements not
useful or relevant for private companies
± Greater FASB emphasis on public
companies
± Increased cost, complexity, time-
consuming using full GAAP
± Use of OCBOA raises the issue of what’s
“generally accepted”

49. Blue Ribbon Panel’s Conclusions
± A problem exists that needs resolution
± Recommendation #1 - Enhance GAAP
for private companies by making
significant modifications, where
warranted
± Recommendation #2 - FAF should
create a separate private entities
accounting standards board

50. Other Key BRP Recommendations
Framework for differential decision criteria
3-5 year sunset review to determine
effectiveness of new board
5-7 board members
$4-5 million annual budget

51. 90.87% of MACPA members believe we need
Private Company Standards
Insights form the Spring & Fall, 2010 PIU / town hall meetings covering 2,000+ members

52. Judy O’Dell chair of FASB PCFRC
shared her perspective

53. MACPA’s response
± MACPA sent comment letter to FAF on
December, 2010 for initial survey
± MACPA Chair Kimberly Ellison-Taylor
appoints special Accounting Standards
Task Force
± Accounting Standards Task Force held
meetings from Jan – Mar, 2011

54. Our guiding principles

55. Draft conclusions –Approved by
MACPA Board
± Private Company Standards need to be
addressed (costs, complexity, OCBOA)
± Current structure is not working –
PCFRC recommendations were not
addressed, prior studies indicate issue
± Other jurisdictions around the world
recognizes needs of private company
users are different
± MACPA Sent comment letter to FAF (up
to 2,554 letters)

56. Our
State
Tax
Commiqee
takes
a
proacDve
posiDon
in
General
Assembly

57. XBRL
&
MACPA
&
You
• SEC
Mandate
–
June
15,
2011
-­‐
third
wave
• Radical
Transparency
(DATA
Act
of
2011)
• LiberaDon
of
data
for
financial
analysis
• Reduced
compliance
burden
(SBR)

58. XBRL

59. LegislaDve
Advocacy
and
the
Power
of
WE!
CPA
Day
in
Annapolis
–
January
18,
2012

60. The
Maryland
Story

61. Maryland Business Agenda - 2011
• Defeated Combined Reporting
• Defeated extension of Millionaire Tax
(6.25%)
• Passed Small Business Real Property
Tax Payment Plan (2012)
• Defeated Corporate Throwback and
Gross Receipts Tax
• New law – Requires MD Employers to
notify employees eligible for earned
income credit
Source: Maryland Chamber of Commerce

62. MACPA 2011 Agenda
5 for 5!
ü Pass 120/150 legislation
ü Stop Sales Tax on Accounting
Services
ü Exempt CPAs from Debt
Counseling Bill
ü Stop Trial Lawyers attempts at
Tort Liberalization –
Comparative Fault
ü Pass Safe Harbor legislation
CPA Day in Annapolis
January 18, 2012

63. Maryland
CPA
Agenda
2011
How
we
did
it

64. Looking ahead to 2012
• Special Session to deal
with redistricting (and
budget) – will see tax
proposals
• Maryland Social Security
Privacy Act – AG Opinion
• Sales Tax on Services
• Combined Reporting
• Comparative Fault =
increase liability
• Quid Pro Quo for DC
mobility

65. Sales Tax on Services
• Should accounting services be taxed?
• We’ve fought and won on this numerous times
---- but times are changing
• 19 states are considering taxing services
• Could be an issue in 2012-2013 budget
– Loss of the one-time bailout funding leaves an $8
Billion hole to fill
• QUESTION: Should this continue to be a
bedrock issue for MACPA?
65

66. Safe
Harbor
LegislaDon
passes
and
evens
playing
field
for
CPAs
doing
Reviews
&
CompilaDons

67. 120/150
CPA
Exam
requirements

68. An
example
-­‐
CPE
RegulaDons
involved
all
levels
–
law,
regulaDons,
and
procedures
Maryland Senate & Maryland Governor
A Bill SB 128 Law
From State Board House passes bill signs into law
Maryland State Board of
Public Accountancy
Clarify thru regulations
And enforce the law

69. CPE
• CPE
=
CPE
• Self-­‐study
allowed
hour
for
hour
&
unlimited
• 4
hour
Ethics
Requirement
every
two
years
• Peer
Review
qualifies
for
CPE
• CPE
Audits
– SaDsfactory
Compliance
– Adjusted
Compliance
– Audit
Failure

70. New
CPAs
take
oath
to
Protect
the
Public
Interest
MACPA
CPA
Summit
scheduled
for
June
11th
&
12th,
2012

72. Record
#s
of
CPAs
take
Exam
in
MD

73. It
all
adds
up
$
per
partner
/
year
1. CFPA
$250
2. Tax
Prep
$100
3. Debt
$150
4. Mobility
$500
Total
$1,000
Sales
Tax
est
$22,000
per
partner

74. Help
us
help
you
–
support
our
PAC

75. CompeDDon

76. AICPA
/
PCPS
Survey
Results

77. AICPA
PCPS
Survey
Results

78. Why
ERM?
AICPA Thought
Leadership Area in
Business, Industry
and Government
Website with
Briefs, MAGs,
Research and
other resources to
help members with
risk management.

80. Top
10
Issues
Facing
BizInd
1. CommunicaDng
effecDvely
(new
tools
vs
face
to
face)
2. Talent
–
Training
–
Succession
Planning
3. Economic
environment
4. GeneraDonal
–
Work/Life
balance
5. Supply
chain
–
rising
costs
6. Strategic
planning
in
uncertainty
7. Financial
literacy
about
business
8. Increasing
government
regulaDons
9. IT
security
/
privacy
10. MulD-­‐tasking
and
increasing
workload

81. What
can
MACPA
do
to
help?
The
group
idenDfied
areas
that
MACPA
could
help
CFOs,
controllers
and
financial
professionals
deal
with
the
pressing
issues.
One
major
idea
was
to
have
quarterly
roundtables
focused
on
one
of
these
main
issues
with
a
facilitated
discussion
aeerwards.
Most
of
the
key
issues
were
already
being
dealt
with
by
MACPA.
The
group
emphasized
the
importance
of
conDnued
advocacy
at
the
federal,
state,
and
state
board
areas.

82. Sustainability
–
People
–
Planet
–
Profits
and
the
Triple
Boqom
Line
hqp://www.theiirc.org

84. Leadership
Is this working for you?

85. How
is
leadership
changing?
“What got you here won’t get you there.”
– Emmanuel Gobillot - Leadershift

86. Leadership
is
DEAD
• DemocraDc
• ExperDse
• AqenDon
• Diverse

88. What
hasn’t
changed
about
leadership?
• Engagement
• Alignment
• Commitment
• Accountability
“First I get all of my men facing the same direction.”
- Napoleon

89. CLO magazine shows the changing role of leaders

90. Leadership
is…
The
ability
to
gain
insights
and
the
apDtude
to
turn
them
into
acDon
–
Insights
to
AcDon
-­‐ Tom
Hood
&
Gretchen
Pisano
(one
without
the
other
is
either
useless
or
destrucDve)

91. Five Qualities of Extraordinary Leaders
1. Sight - Ability to see emerging
L≥C
patterns and shift perspective
when necessary
2. Insight – Ability to think
strategically and critically to gain
insights
3. Create – Seek high leverage
opportunities that build on your
strengths
4. Communicate - Ability to
make your thinking visible to
others and the ability to
collaborate inside and outside
your organization
5. Inspire – Ability to mobilize
support and engage others
involved in doing the work to join
you in ACTION

92. Leadership in the new normal
Three Critical Competencies
Built on strengths
Strengths- and positivity
Future-minded Based
and flexible mindset Self-awareness
Leadership In the moment
Ability to make
your thinking Strategic
visible to others Thinking
Collaborative and
curious with the ability Network
to ask powerful questions Leadership
Capable of engaging and
Inspiring people
92

93. Leadership is Connect & Collaborate!
From:
Command
&
Control
To:
Connect
&
Collaborate

94. Leadership
=
MulDplicaDon
• 15
X
–
ROI
strategy
as
process
&
alignment
• 8
X
–
Strengths
• 6
X
–
Trust
&
Engagement
• 3
X
-­‐
PosiDvity

95. Finding Your Edge…
• Strategic thinking – all
of the time
• Make your thinking
visible to others
• The power of We –
Collaboration
• Innovate by finding
your edge (Strengths,
Positivity,
Opportunities)

96. The
Great
Hall
at
Oxford
FoundaDon
started
in
1249,
completed
in
1634
according
to
wikipedia

97. Succession
Planning
for
our
Profession
MACPA
Leadership
Academy
debuts
September
18-­‐20,
2011

98. The
5
Major
Features
of
the
New
Normal
according
to
David
Pearce-­‐Snyder
1. Society
will
be
older
(and
hopefully
wiser);
2. A
“rendezvous
with
austerity”
–
individuals
and
insDtuDons
will
have
to
live
within
their
means;
3. Technology
will
pervade
every
aspect
of
daily
life,
work
and
play;
4. 3rd
world
growth
will
drive
the
global
economy
5. The
decision-­‐making
environment
will
be
more
complex
for
everyone

99. Which
one
is
the
biggest
opportunity
for
CPAs?

101. Some closing thoughts
“It is hard to plan for the long term future when you don’t
know what is going to happen five minutes from now.
Today, a competitive edge is thin and temporary; the edge
quickly becomes the margin. The ability to define the edge,
and the ultimate competitive advantage, is found in the
smarts, heart and ingenuity of your people - that's your
powerhouse. Tap that, train it, focus it and mobilize it; now
you've engaged a network and inspired a sustainable shift.
Insight to action, one without the other is either useless or
destructive.”
-Tom Hood & Gretchen Pisano
co-authors of the i2a: Insights to Action
Strategic Thinking System
http://www.bizlearning.net/live/i2astrategicplanning

102. A leader’s job is to…
Provide hope &
inspiration!
Tom Hood & Gretchen Pisano

103. Links
• Strategic Planning
– http://www.bizlearning.net/live/i2astrategicplanning
• Future Forums
– http://www.bizlearning.net/live/i2afutureforums
– Leadership Development
– http://www/bizlearning.net/live/i2aleadership
• Customized Training
– http://www.bizlearning.net/learningcenter/
• Search our Catalog
– http://www.bizlearning.net/learningcenter/
customizedtraining/BLI_catalog.cfm

104. Tom
Hood,
CPA.CITP
CEO
Maryland
Associa8on
of
CPAs
Business
Learning
Ins8tute
(443)
632-­‐2301
E-­‐mail
tom@macpa.org
Web
hNp://www.macpa.org
Blog
hNp://www.cpasuccess.com
hNp://www,bizlearningblog.com

105. =
Leadership blogs:
www.cpasuccess.com
www.bizlearningblog.com
Follow me on:
ü Twitter: http://www.Twitter.com/tomhood
ü LinkedIn: http://www.linkedin.com/in/tomhood
ü Facebook: http://www.facebook.com/thoodcpa
ü Plaxo: http://tomhood.myplaxo.com
ü Slideshare: http://www.slideshare.net/thoodcpa
ü Youtube: http://www.youtube.com/thoodcpa
ü Second Life avatar name: Rocky Maddaloni
Check our Customized Training Catalog out:
http://www.bizlearning.net